South Malaysia Industries takes SC to court again over sanctions linked to stalled takeover bid

Tuesday 22 Sep 2026

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KUALA LUMPUR (Aug 28): South Malaysia Industries Bhd (KL:SMI) and its four directors are taking the Securities Commission Malaysia (SC) to court again, this time to challenge sanctions imposed over the board’s handling of a long-stalled mandatory takeover offer by Target 1 Sdn Bhd.

The property company and its directors filed an application for leave to commence judicial review, together with a certificate of urgency, on Friday (Aug 28) after the SC rejected the company’s request to reconsider the sanctions imposed in March this year, according to its filing with Bursa Malaysia on Friday.

Following the rejection of SMI’s review application, the SC directed the company to provide Target 1 with Record of Depositors (ROD) information — which had been withheld since the takeover offer was launched in August 2024 — by Sept 1 and confirm compliance.

SMI and its directors are asking the High Court to cancel the SC’s sanctions, including the reprimand, RM455,000 penalty and directive to furnish the ROD to Target 1. They are also seeking for the SC’s decisions dated March 18 and Aug 24, 2026 to be suspended while the case is heard.

The four directors involved are Datuk Dr Abdullah Sepien, Datuk Zainuddin Yahya, Latifah Abdul Latif and Datuk Sri Mohd Mokhtar Mohd Shariff.

On March 18, 2026, the SC found that SMI’s board had breached takeover rules by failing to provide the ROD within four market days of the mandatory takeover officer launched by Target 1 in August 2024, delaying the appointment of an independent adviser and submitting the required circulars late.

SMI appointed Sierac Corporate Advisers on Sept 26, 2024, 37 days after the takeover offer was announced.

Target 1, controlled by businessman Francis Leong Seng Wui, held a 30.67% stake in SMI before entering a collaboration agreement with Techbase Industries Bhd’s (KL:TECHBASE) subsidiaries Honsin Apparel Sdn Bhd and HiQ Media (Malaysia) Sdn Bhd.

Under the agreement, Honsin and HiQ acquired 16.86% and 2.52% stakes respectively, bringing their combined stake with Target 1 to 50.05%. This triggered a mandatory takeover offer for the remaining 49.95% of SMI at 45 sen per share, worth more than RM47 million. Target 1 said it intended to keep SMI listed.

However, the offer has yet to proceed to the distribution of the offer document due to disputes over the ROD and SMI’s board composition. In February 2025, the SC ruled that Target 1 must dispatch the offer document within 21 calendar days of receiving the ROD from SMI.

Second judicial review against SC related to Target 1

The judicial review is SMI’s second challenge against the SC.

The first was filed in November 2024 against SC’s nod for Target 1 and its associates to vote on the appointment of six nominees to SMI’s board before the takeover document was dispatched.

Under the takeover rules, an offeror and parties acting in concert are generally restricted from appointing directors or exercising their voting rights to secure board representation before the offer document is issued, unless the SC gives its consent. The regulator granted that consent in November 2024.

Target 1 subsequently said an extraordinary general meeting held on Jan 9, 2025 approved all six nominees, with proxies representing its 50.05% interest voting in favour. SMI disputed the validity of the meeting, maintaining that it had not been properly convened.

SMI commenced judicial review proceedings against the SC’s consent the following day. After its initial application was dismissed on technical grounds, the company refiled the case in September 2025. The High Court granted SMI leave to proceed with the challenge on July 31, 2026, with the hearing scheduled for Oct 16 this year.

Edited ByPresenna Nambiar

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